The common-size income statement reveals significant fluctuations in revenue composition and profitability over the observed period. A notable shift in the revenue mix is apparent, with changes in the relative contributions of company-operated stores, licensed stores, and other revenue streams. Cost of revenues and store operating expenses demonstrate considerable variability, impacting gross profit margins. Operating income exhibits a complex pattern, influenced by restructuring activities and gains from asset sales. Net earnings attributable to Starbucks also show substantial changes, reflecting the interplay of these factors.
Revenue Composition
Company-operated stores consistently represent the largest portion of net revenues, generally ranging between 81% and 85%. Licensed stores contribute a more volatile share, increasing from around 11% to nearly 13% before decreasing to around 11% in the most recent quarters. The ‘Other’ category demonstrates the most significant fluctuation, peaking at approximately 11% in June 2020 and declining to around 5-6% in recent periods. This suggests a potential shift in revenue diversification strategies or changing business activities.
Cost Structure
Product and distribution costs, as a percentage of net revenues, generally remain between 29% and 35%, with a peak around 35% in March 2020. Store operating expenses exhibit greater volatility, ranging from approximately 39% to a high of 60% in June 2020, before stabilizing around 40-45% in recent quarters. The combined effect of these costs results in a cost of revenues percentage that fluctuates significantly, reaching a high of nearly 96% in June 2020 and generally ranging between 70% and 78%. This suggests a substantial impact from store-level expenses and product costs on overall profitability.
Profitability
Gross profit as a percentage of net revenues demonstrates considerable variation, declining to a low of 4.74% in June 2020 before recovering to a high of 31% in June 2021. Recent quarters show a decline, falling to around 21-23% in the latest periods. Operating income exhibits a similar pattern, with a low of -16.67% in June 2020 and a peak of 27.59% in September 2021. Net earnings attributable to Starbucks fluctuate significantly, ranging from a loss of -16.07% to a high of 21.66%, with recent quarters showing a decline to around 9-10%. These fluctuations highlight the sensitivity of profitability to changes in revenue mix, cost management, and other operating factors.
Other Operating Items
Other operating expenses remain relatively stable, generally between 1% and 2% of net revenues. Depreciation and amortization expenses also exhibit relative stability, ranging between 3.75% and 8.55%. General and administrative expenses fluctuate between 5.97% and 9.47%. Restructuring and impairments are generally minimal, but represent a notable expense in certain periods, particularly in June 2020 and September 2025. These items, while smaller in magnitude compared to cost of revenues and store operating expenses, contribute to overall profitability trends.
Non-Operating Items
Interest income and other, net, remains relatively small, generally between 0.15% and 1.81%. Interest expense is consistently around 1.4-1.7% of net revenues. Income tax expense fluctuates significantly, influenced by earnings levels and potential tax benefits. The impact of divestitures and noncontrolling interests is minimal, except for a significant gain from divestiture in September 2021.
In summary, the period analyzed demonstrates a dynamic business environment with significant fluctuations in revenue composition, cost structure, and profitability. The company appears sensitive to external factors and internal strategic decisions, as evidenced by the variability in key financial metrics. Recent trends suggest a potential decline in gross and net profit margins, warranting further investigation.
